The EU’s bonus cap for bankers as part of CRD IV is nearly final with the further political agreement reached on March 20th. The cap is now set to go to the European Parliament for expected passage in mid-April.

Although the text has not been released, we understand that a key point from the latest agreement is that the cap will only apply to compensation for performance after January 1, 2014. The cap is not expected to apply to bonuses paid out in 2014 in relation to 2013 performance, as had been a large concern.

Meanwhile, a draft proposal also moved forward to cap bonuses of certain asset managers, which was under consideration by Members of the European Parliament on the Economic and Monetary Affairs Committee. It now goes to the full Parliament for an expected vote in April on whether to call for three-party negotiations with EU member states and the European Commission.

The cap applies to the EU’s undertakings for collective investments in transferable securities (“UCITS”), which manage assets for retail investors and control about €6 trillion in funds.

We believe that the most likely effective implementation date for the UCITS proposal would be January 1, 2015. For firms with a December year-end, this means that pay earned during the 2014 performance year would likely be subjected to UCITS V rules and the cap.

This FS Regulatory Brief highlights the key requirements of the asset manager proposal.